Veoh Still Not Dead Enough For Universal Music; Asks Court To Rehear Case Yet Again

from the again? dept

I sometimes wonder about the lawyers representing the major labels, and their ability to continually bill those supposedly struggling labels top dollar in quixotic attempts to fight any and all innovation. We've written plenty of times about Universal Music Group's legal crusade against online video site Veoh. Veoh was a site not unlike YouTube, but Universal Music sued it years back, eventually losing badly, as the court made it clear that Veoh was protected by the DMCA's safe harbors. UMG appealed and, even though Veoh had won the case, the company itself shut down, later admitting that the legal bills from the UMG case were too much. On appeal, UMG lost again as the appeals court once again pointed to the DMCA's safe harbors. Not able to accept a loss, UMG asked the court to rehear the case, which it did. End result?another big loss for UMG.

Apparently, no one at UMG is getting the hint. The company has now filed, yet again, asking the court to rehear the case. UMG argues that the rulings against it, arguing that the court misinterpreted parts of the DMCA's safe harbor. As in the Viacom v. YouTube case, we see Universal Music here trying to completely rewrite the DMCA -- pretending that it means something that it clearly doesn't, and which many courts have rejected. I can't see how that's a wise use of UMG's money.

Specifically, it argues that the DMCA has always intended the burden for copyright enforcement to fall on service providers.

The new opinion effectively rewrites the DMCA to provide different
rules for copyright infringement on the internet. It improperly shifts the burden
of online copyright enforcement to content owners whose businesses depend
on payment for the use of their works, while broadly shielding internet service
providers ("ISPs") who use and reap financial benefits from those works
(without compensating their owners) even when they have the right and ability
to police their sites. The Opinion upends the carefully-crafted balance
embodied in Section 512 of the Copyright Act. And, as explained below, the
Opinion fails to clarify the limits or scope of the DMCA's "safe harbors."

Almost nothing there is true. The ruling is entirely consistent with other rulings on the DMCA. The entire point of having safe harbors in the first place is because the burden must be on the copyright holder, since the service provider is never in the position to know that a work is definitely infringing, since the work may actually be authorized. Basically, this is a case where Universal Music's lawyers are presenting their wishful thinking of what the DMCA should be, even though that has been rejected by the courts over and over again. There are three key points that Universal Music is making -- all of them laughable.

First, it's arguing that Veoh doesn't qualify for safe harbors because the safe harbors only apply to storage, and that anything else (such as the display of the work) is not covered.

first, the holding that section 512(c)'s
safe harbor for infringement "by reason of the storage at the direction of a
user" actually encompasses all "access-facilitating processes that automatically
occur when a user" uploads, streams or downloads infringing material
eviscerates both the language and structure of the DMCA. Congress created
four discrete safe harbors, each addressing different activities. After the
Opinion, Section 512(c), now applicable to "access-facilitating processes,"
swallows several of the other supposedly different and discrete safe harbors
whole.

This would basically disregard all of the caselaw surrounding the DMCA since its inception, and pretend that the key safe harbors only apply to web backup/storage. Any service provider (such as a webhost) that allows users to display the content they store wouldn't be eligible under this interpretation. And, of course, that's crazy. Anyone who was around for the original fight that brought about the DMCA's safe harbors knows that it was the telcos who fought for those safe harbors. To think that they were only fighting to protect web backup services is laughable. There is simply no support for this argument, and no court has agreed.

They also argue that this ruling "eviscerates" the "red flag knowledge" part of the DMCA.

Second, the Opinion ignores longstanding copyright law to hold that an
ISP does not have either actual or red flag knowledge of infringement unless it
has received information identifying "specific instances of infringement."
Section 512(c)(1)(A) requires no such thing. As a result, content owners must
now incur the expense of continuously scouring hundreds of thousands (or
indeed millions) of constantly changing internet websites, to attempt to locate
copies of their works and then send take-down notices or otherwise advise ISPs
of these "specific instances of infringement" on their sites. The Opinion
requires a world wide web game of "Whack-A-Mole" to police infringement.

Again, this argument is wishful thinking. The whole reason why red flags only concern specific knowledge, as outlined in multiple other cases, is because "general knowledge" that there is some infringing works on a site doesn't do anything useful, as the site would have no meaningful way of dealing with it at that stage, not knowing what is actually infringing.

Finally, UMG tries to pretend (despite tons upon tons of caselaw to the contrary) that the DMCA's safe harbors cannot apply to a service provider like Veoh, because of its own total misreading of one of the safe harbor clauses (which the court read properly).

Third, as a consequence of the Opinion's interpretation of Section
512(c)(1)(B), websites like Veoh, which (a) copy, perform, and distribute (by
offering digital downloads), tens of thousands of infringing works, (b) receive
a direct financial benefit from the infringement in the form of advertising
revenues that directly increase with each view of an infringing video by a user,
and (c) have the "right and ability to control" the infringement as those terms
have historically been understood in copyright law, nevertheless get a free pass
under the DMCA unless they also engage in an undefined "something more" -which apparently must be akin to inducing infringement. If the Opinion is left
standing, ISPs like Veoh will have no obligation either to affirmatively police
their site (indeed, they are disincentivized from doing so lest they find an
infringing file which would give them "actual" or red flag knowledge), to
adopt readily available technical solutions to mitigate infringement, or to
obtain authorization from content owners.

First of all, Veoh's dead, so it's not like it will have anything to do, but that's a separate point. More importantly, UMG's interpretation of almost every key point is questionable here. Veoh qualifies for the safe harbors because it's a service provider. It does not "receive a direct financial benefit from the infringement" because it is receiving financial benefit the exact same way no matter whether the content is infringing or not. Veoh received financial benefit from providing a service of hosting videos. That has nothing to do with whether or not it financially benefits directly from infringement. But, most importantly UMG is pretty blatant in arguing that the DMCA somehow requires service providers to "affirmatively police their site." The law has never said that and no court has ever agreed with that argument either. UMG is simply trying to rewrite the DMCA the way it wishes it was written and hoping a court might agree, even after it's lost time and time again with the nearly identical arguments.

It will come as little surprise that the arguments here mirror those made by Viacom against YouTube, but both have been pretty big losers so far. They're basically trying to insist that the DMCA must mean what they always wanted it to mean, even though it's clear from the language, the legislative history and the caselaw surrounding the law, that it was never meant to be interpreted this way.

In the meantime, though, Veoh is still dead. And all this is doing is throwing more UMG money to lawyers who have no problem presenting silly arguments like this one so long as they keep getting paid.

Re: I wonder...

It would make more sense if the judge made them repay Veoh at least triple what it cost Veoh in legal fees, with some of it going to any unpaid Veoh legal bills, and the rest going to ex-Veoh shareholders.

Re: Re: I wonder...

Why not make a rule that if one party is obliterated financially due to the legal cost, the opposing party, if lost the case should pick up the tab, outside any of the damages which may awarded to the obliterated party. On every appeal hence, if the appellant lost again, they will be liable to all of the opposing party's previous legal cost, plus previous damages if awarded, plus the new legal costs even if the appeals doesn't incur direct cost to the opposing party, but will be calculated from the appellant's cost never the less, plus new damages if awarded.

For example, A is suing B to the point of financial ruin. A lost the case and B is awarded a $100 damages. Say the legal cost to B is $200. So A must pay B $300. A appeals, and spent $500 for it's legal cost. A lost again, so they now have to pay $300+$500=$800 to B. A double down, and appeal again, this time spending $1000. A lost again, and this time, the court grew tired of A's antics and award B a $1000 damages. So far, A has to pay $300+$500+$1000+$1000=$2800.

Re:

Where exactly are their "lies"?

If the DMCA was functioning as intended, there wouldn't be mass infringement on the scale we know exists.

The brief is totally solid but Mike Masnick is so hilariously dishonest that he refuses to admit it, pretending yet again that willful blindness constitutes a valid legal defense, when he is 100% aware that it doesn't.

Re: Re: Re:

Re: Re: Re: Re:

The whole safe harbors make clear that general knowledge of infringement is not enough to make any provider liable. He can't point you where it says a particular file because the WHOLE DAMN THING talks about GENERAL KNOWLEDGE. Which implies directly that it applies when knowledge of a PARTICULAR file is demonstrated.

I know u are mad because the courts got it right and against your masters but don't let your rage blind you ;)

Re: Re: Re: Re: Re:

Lol, I'm not mad about anything. And you clearly haven't read the DMCA very thoroughly. The DMCA also requires a repeat infringer policy. If, as you are pretending, there was no way to know what is infringing, why is that in the law?

Re: Re: Re: Re: Re: Re:

Once again, you parse words and make us out to say things we aren't saying.
There are ways of knowing what's infringing. It's called being told by the copyright holder! Repeat offender policy? Last I checked the DMCA, it merely says websites must have a repeat offender policy, but not what the policy must be.
Anyway, at best, a website operator can merely ban an account that is accused multiple times of violating copyright (yes accused, at no point do we ever get to the point of someone being dragged into a court-room and them being allowed to claim innocence). At which point, all the accused has to do then is make a fresh account to continue infringing.

Get it? You're saying the website operator must know what is infringing BEFORE being told by the copyright holder, and of playing a completely futile war of whac-a-mole, which can very easily cause collateral damage (shutting down accounts based on accusations alone, deleting works based on accusation alone, which has already happened. I invite you to ask LittleKuriboh on Youtube, who's Youtube channel has been blocked must be close to 10 times by my count).

Re: Re: Re: Re: Re: Re:

The DMCA also requires a repeat infringer policy. If, as you are pretending, there was no way to know what is infringing, why is that in the law?

Of course there is a way to know what is infringing. It's called a "DMCA notice." The "repeat infringer" policy does not require shutting off users until after repeated DMCA notices.

And those notices, by law, must refer to "Identification of the material that is claimed to be infringing [...] and information reasonably sufficient to permit the service provider to locate the material." In other words, specific material at a specific URL.

And, in fact, the law is explicit that improperly-sent notifications are not enough to lose safe harbors: "a notification from a copyright owner [...] that fails to comply substantially with the provisions of subparagraph (A) shall not be considered [...] in determining whether a service provider has actual knowledge or is aware of facts or circumstances from which infringing activity is apparent."

If even an improper DMCA notice is not enough to raise "red flag" knowledge, then there's no way that "general knowledge" of infringement is unlawful, and certainly isn't anything like "willful blindness."

Re: Re: Re: Re: Re: Re:

Repeat infringer policy has nothing to do with knowing that infringement occurs generally speaking. It has to do with what the service does once a person is caught using the service for infringing purposes repeatedly. At that point the copyright holders have already pointed the infringing files (one or multiple holders) and the infringement is well known. If the service does not take action for that specific infringement (or repeat infringer) then it may become liable.

There are ways of knowing what's infringing and all of those involve the copyright holders telling the service a determined stance is infringing. A service provider can't possibly know a clip uploaded by X is infringing especially if there are contributions associated with it (ie: derivative work) and it's up to a court to rule on dubious cases of fair use (really, pretty much whatever the MAFIAA believe it's worth pursuing it seems), not the service provider.

Re: Re:

"If the DMCA was functioning as intended, there wouldn't be mass infringement on the scale we know exists."

1) The DMCA is functioning as written.
2) When people say "we know" without attribution, they're on the same level as flat-Earthers, slave-owners, and Holocaust deniers, claming "common knowledge" that doesn't, in fact, exist, except in their own deluded minds.
You're in august compnay, boy.

Re: Re:

>>>> If the DMCA was functioning as intended, there wouldn't be mass infringement on the scale we know exists.

If the laws on crime were functioning as intended, there wouldn't be crime either.

If the notion of equity were functioning as intended, there wouldn't be inequity.

If natural rights of all humans were functioning as intended, there wouldn't be a need for attorneys/solicitors.

If wishes were were horses then beggars would ride,
If turnips were swords I'd have one by my side.
If 'ifs' and hands were pots and pans
There would be no need for tinkers hands!

Sadly the universe doesn't work like the above and instead is constantly changing which is why people like yourself who keep focusing on the past with your "woulda, coulda, shoulda" statements will always fail because you don't want to focus on how to fix problems that are constantly changing and in constant flux dependant on the changing mores of the society. Instead you scream about how you are constantly hard done by and why it is everyone else's fault!

Re: Re:

Re: Re:

Every time UMG appeals or asks to be reheard, it should be considered double or nothing.
So Veoh should have been awarded legal fees for winning the first trial.
Then double legal fees for the appeal.
Then quadrupal legal fees for the first rehearing.
And if UMG loses this second rehearing, Veoh should be awarded octuple legal fees.
And on and on and on.

Re: Re:

Re: Re:

Or they're really trying to set a precedent to ruin the DMCA safe harbors. That would mean they could go back to padding their wallets with lawsuit money instead of, you know, creating quality content.

Re:

From what I've seen of music industry actions elsewhere, Veoh is their ideal target. They want to get a favourable ruling on this point of law, so will throw everything they can at it - and Veoh no longer exists which (I assume) means that it won't be fighting back.

If they try to go after anyone else, they run the risk that that person will fight back, in which case (a) they could make things worse if they lose badly (i.e. they could legitimise an "evil pirate site"), (b) it will be more expensive, and (c) the court might have to hear the other side's arguments.

Re:

That seems to have been their strategy ever since the first appeal when Veoh was already dead. At the time, there was speculation as to what would happen to the ruling since the "winner" might not have been able to argue on the appeal on account of being bankrupt.

Casino Night at the Courthouse

UMG is just playing big, and it's actually not a bad strategy.

They are throwing money into this case in hopes of setting a legal precedent. The odds are not in their favor, but they don't have to worry about the Veoh fighting back and if they were to get a win, you could bet that YouTube and every similar service would be in their sites next.

Isn't there some way to benchslap these lawyers for misreading the law over and over and over?
It should be clear that the court has ruled over and over that their desire for a different outcome is not supported by law, and continuing the case is a waste of judicial resources.

Once again we have a member of the cartels using their money to smash innovation they dislike. They assume the content magically creates money and they are entitled to all of it. That the monopoly rights they enjoy for longer than the average life span, come with no responsibilities to protect it. That protecting it is a burden everyone else should bear because they can't possibly be making enough money.

One is left to wonder how much UMG spends on these lawyers in these crazy campaigns. Do they even understand that spending that money on innovating over litigating would improve the bottom line? That cutting off funding to everyone selling them snake oil to fix piracy, and listening to consumer demand would work more effectively and save them millions?

It's easy to see why they want to press on with this case. Veoh is already out of business, so they're hoping everything they do will be virtually unopposed. Their arguments don't sound that bad if nobody is arguing the other side.

Of course, since the case has ALREADY been reheard, I think the judges may frown on re-rehearing it. Especially since their entire argument seems to be "you're wrong". If they had something more like "here's some case law that has changed since the last rehearing", they'd have a better chance. If they had an argument, they should have already MADE it a long time ago.

Re:

It's easy to see why they want to press on with this case. Veoh is already out of business, so they're hoping everything they do will be virtually unopposed. Their arguments don't sound that bad if nobody is arguing the other side.

That is exactly right. What better time to get a precedent set than against an unarmed opponent. UMG is not dumb and this is not a waste of their money. They could come out of this with a big win because no one is there to argue the other side.

Mike downplays key point of "red flag" knowledge.

"the site would have no meaningful way of dealing with it at that stage, not knowing what is actually infringing." -- SURE IT WOULD, MIKE. Just delete the file. It's not even possible that harm is thereby done to the copyright owner.

Now, again, a file host such as Megaupload, with 700M files clearly labeled with titles of recent content, IS RED FLAG KNOWLEDGE, and it's easily confirmed by ten seconds of viewing. -- So actual knowledge of infringement is literally ten seconds away, and file hosts have SOME duty to check. It's ONLY by looking the other way all the time that file hosts can legally exist.

SO Mike is mainly here going back to the "see no evil, hear no evil, means there is no evil" logic. Mike slithers around the point because WANTS file hosts to escape responsibility.

As for the court case, it may be hopeless, but the logic is sound. Mike even points out that telcos wanted DMCA in order to dodge responsibility. But those are definitely carriers, while file hosts are definitely storing and even promoting infringing content.

Take a loopy tour of Techdirt.com! You always end up same place!http://techdirt.com/
Where Mike "supports copyright" -- except when he supports grifters who use someone else's copyrighted material.04:08:57[f- 65-3]

Re: Mike downplays key point of "red flag" knowledge.

"It's not even possible that harm is thereby done to the copyright owner."

Of course, you completely ignore the harm done to those whose speech is being deleted.

"it's easily confirmed by ten seconds of viewing."

Wrong. With just ten seconds of viewing, all you can ascertain is that its a copyrighted file (since all works are automatically copyrighted upon being placed on a fixed medium). That is all. However, you cannot ascertain whether or not the file is actually authorized to be there. How many times has Techdirt reported on copyright holders screaming that their own works be blocked?

"It's ONLY by looking the other way all the time that file hosts can legally exist."
And with that, you are saying that the internet itself, as one giant file host, cannot legally exist, thanks to the dictatorial, law-abusing powers of copyright.

Re: Re: Mike downplays key point of "red flag" knowledge.

Don't forget while it may only take a second to read any one title it takes an unreasonable amount of time to read all the titles to every file uploaded. So it's not like they can just glance at the list of a billion files uploaded that day and pick out all the stuff with the title of a copyrighted work.

Re: Re: Re: Mike downplays key point of "red flag" knowledge.

Re: Mike downplays key point of "red flag" knowledge.

"SURE IT WOULD, MIKE. Just delete the file."

Delete the file? Sure. Easy. But, WHAT file? He's talking about general knowledge, not specific knowledge of a particular infringing work. That's the WHOLE POINT. Simply knowing that somewhere on your site there is probably an infringing file, does not mean that you lose safe harbors for every file.

"So actual knowledge of infringement is literally ten seconds away, and file hosts have SOME duty to check."

What gives them the duty to check? Do ISP's also have a duty to monitor every file that gets transferred over their lines?

And how do they know it's infringing? Look at the YouTube case, where Viacom uploaded authorized works under seemingly random usernames.

Re: Mike downplays key point of "red flag" knowledge.

No site will EVER know what file is infringing until it receives a DMCA notice from a copyright holder and as long as the site deletes the file after the DMCA is received then the site is covered by the safe harbour.

Re: Re: Mike downplays key point of "red flag" knowledge.

That's not our problem, is it?

Does Sam's Club rely on the general public to police them and make sure they're not selling fenced goods? No. Everyone in the world is responsible for policing their own businesses, and there is zero basis for thinking Internet companies shouldn't have to do the same.

Re: Re: Re: Mike downplays key point of "red flag" knowledge.

You missed a line, specifically this one:

'...AND determine what is infringing or not.'

Since no-one but the copyright holder can accurately determine what is and is not authorized to be posted(and even then that pesky thing known as 'fair use' can muddy the waters regarding what is and is not legal to post), then yes, it is indeed their problem and not something the hosting site can, or even should have to do.

Re: Re: Re: Re: Mike downplays key point of "red flag" knowledge.

Not really true, but taking your line of argument, if someone sees a copy of Harry Potter on their site, shouldn't they at least have the responsibility to inquire as to whether or not it is a legal copy?

Re: Re: Re: Re: Re: Mike downplays key point of "red flag" knowledge.

Again, how are they supposed to know if its unauthorized? For all we know, J K Rowling could decide tomorrow to put up torrents of her own, or allow the full movies to be put up on tube sites.
You're assuming that the file will never be authorized to be on those sites. Like the saying goes "Assume makes an ass out of u and me". You don't allow for the possibility.

More and more artists are deliberately releasing their work for free on file sharing sites and networks. Are you seriously arguing that every website operator should be able to use clairvoyance to determine if J K Rowling doesn't want Harry Potter on their sites from now til the end of time? What if she changes her mind and allows it? Are the website operators supposed to consult the non-existent Central Copyright Database?
Even if the file is infringing and deleted as per the DMCA, and then put back up later...how is the operator supposed to deal with it? He doesn't know where the fresh file is. A file-name search will be useless, since its the easiest thing to change a file name from Doctoral_Thesis.docx to Harry_Potter_Goblet_of_Fire_1080p.mkv. And no, he can't view the file...that would be an invasion of privacy (what if it is a doctoral thesis still in the last stages of being completed? Or some other work the author doesn't want some random website operator to view?)
No, you're all about harming and trumping everybody else, all so the website operators can try and fail at what is impossible. You know its impossible to pro-actively monitor for infringement, short of destroying the concept of Web 2.0, and that is far too high a price for society to pay.

There's this thing called a counter-notice, where the person who posted it in the first place confirms they are playing by the rules or own the piece that was put up in the first place. The next step for the copyright holder, if they truly believe they hold the copyright, is to turn to the courts. If two parties are arguing with me they own something that is being stored on my property, let them duke it out in court and leave me out of it.

Here's one about the studios themselves uploading movie clips(which given they are the owners would make the uploads legal), all the while trying to hide the fact that they are the ones doing so(which would make the clips illegal):

Re: Re: Mike downplays key point of "red flag" knowledge.

Now, again, a file host such as Megaupload, with 700M files clearly labeled with titles of recent content,

Just because a file has the name of a copyrighted work as its title does NOT mean that it contains that work. It may be a review, or just people talking about the work, or have no relation at all to a work of the same name owned by a studio or label.
Are you claiming the the title is copyrighted, and that using that title on unrelated files is infringing copyright?

"Are they illegal now? How about now? Now?"

UMG clearly has no respect for the justice system, and more money than they know what to do with.
If I was the judge here, I'd drop a massive contempt of court fine on UMG. That'd solve both problems nicely.

Re: "Are they illegal now? How about now? Now?"

Re: "Are they illegal now? How about now? Now?"

And all that money that went to lawyers could have gone to starving artists "who deserve to be paid for their hard work". Every UMG artists who didn't get a paycheck last month should "thank" a UMG lawyer.

Fucking MAFIAA A-Holes !!! I am so sick of these guys.If only the sheep of America would wake up.Please Mr. Normal would you please just wake up and see the World around you for once.
Boycott the MAFIAA !!
Do not let them get a dime out of your Wallet.Stop feeding these Bastards in any way or form.Do not go to Theaters, Buy New MAFIAA Product5s, and only purchase used MAFIAA Physical stuff.

Purchase and Support your Non-MAFIAA Likes and your Non-MAFIAA Local Art ! DO THIS !!!
Fuck all the MAFIAA Content.

Re:

Veoh isn't dead Mike. Please stop saying it is. It may have changed ownership but it is not dead.

The entity that runs the site "Veoh.com" has no connection to the entity fighting the lawsuit.

The original company is dead, other than fighting the lawsuit. It is accurate to say so and I will continue to do so. Yes, that company sold off the assets, including the domain name, but the current Veoh.com has nothing to do with the entity fighting the lawsuit.

Okay, at this point I'm really hoping the judge involved will grow a freakin' spine, point out that UMG is clearly engaged in vexatious litigation here with intent to sue a competitor out of existence and set favorable legal precedence, and fine the crap out of them for it.

this is typical of the way the entertainment industries behave. whenever they lose a case, they just keep on appealing until they get a judge on the bench that they have already managed to brainwash (read that actually as 'bribed'!) so that they get,eventually, the result they want. that is then used as a precedent in future cases. the fact that it took 3 or more trials to get that one result is ignored. if, however, they win a case straight off and the loser appeals, those industries kick up fuck because no one is, according to them, allowed to challenge the court ruling, unless the circumstances are as above!

From Founder / CEO of Veoh

In Nov of 2004, while on my honeymoon, I had an idea : Let anyone broadcast video over the Internet. I believed that with the convergence of broadband, inexpensive video cameras, and editing software that shipped with everyday computers it was the right time to launch a service that would facilitate 'free speech' over video. When I got back from my honeymoon, I immediately transitioned out of the company that I had founded 4 years prior, Akonix Systems, and pursued building my vision.

It took 8 months for us to raise the Series A round of venture capital, with dozens of potential investors passing, arguing that "no one was going to watch amateur video on the Internet". SERIOUSLY!

Art Bilger from Shelter Capital partners was the first one that believed in my vision, and in August of 2005 we announced a $2.5 million Series A financing.

Our first product was released in September of 2005, 3 months after the launch of YouTube, by which time YouTube was already a giant success. With lots of work, pivoting and sacrifices by our team we were able to carve out a space in the market and gain traction.

Over a four year period of time we grew our viewer base to over 28 million unique viewers per month, and raised $70 Million in four rounds of investment. Our investors included :

and many other prominent investors, all of whom did LOTS of due diligence on our technology, business model, and of course legal standing.

We built partnerships with thousands of broadcasters including ABC, CBS, and Turner, all of whom told us that we were exemplary at working with content owners to make sure that their content was protected.

We implemented state of the art 'audio filtering' technology, that was recommended to us by industry groups such as Motion Pictures Association of America (MPAA). I was a featured speaker at NATPE, the National Association of Television Programming Executives. We did EVERYTHING that we could to make sure that our business was sound, legal, and good for the world at large.

Unfortunately, Universal Music (UMG), the world's largest music company didn't agree and in Sept 2007 they sued Veoh in federal court claiming that we are infringing on their copyrights. Even though we had worked with many big media companies in protecting their copyrights, following the provisions of the DMCA, UMG scoffed at their responsibilities to notify us of infringement and refused to send us a single DMCA take down notice. They believed that the DMCA didn't apply. They were not interested in making sure their content was taken down, but rather that Veoh was taken down!

As you can imagine the lawsuit dramatically impacted our ability to operate the company. The financial drain of millions of dollars going to litigation took away our power to compete, countless hours of executive's time was spent in dealing with various responsibilities of litigation, and employee morale was deeply impacted with a constant threat of shutdown. Trying to convince new employees to join the company in spite of this was extremely challenging.

To make sure that our money supply was cut off, in an unprecedented move, UMG sued not only the company, but our investors (Michael Eisner, Art Bilger, and Spark Capital) personally. This move raised lot of eyebrows in the legal community, and at one point was thrown out by a judge, only to continue to be appealed and litigated by UMG. This completely choked off all of our financial oxygen, as trying to convince investors to invest with the threat of them personally being sued is insurmountable.

There were many a times when we thought about simply giving up and moving on, but my father taught me early in life that you "never back down from bullies", and we really felt that we were fighting not only for ourselves but for the very freedom of the Internet. I was so fortunate to have brave people by my side to get me through those tough times.

With money running out, we had to "reduce our staff" (fire people that worked their asses off for years, at startup pace, people that were our family). Doing this was by far the hardest thing that I have ever had to do, and makes me emotional to this day!

We reduced our workforce from over 120 people to under 20 and continued to operate the company in "hibernation mode" to live out the lawsuit, as we expected a decision to come down in our favor.

In Sept 2009, the decision did come down with the judge ruling in our favor, but there was no time to celebrate, as UMG with their practically infinitely deep pockets simply appealed.

With the appeal looming, financing continued to be choked off for us, and in April 2010 we had to sell the company in a fire sale to a small startup. The company that we had built, that was once valued at over $130 Million was gone. Along with it went the livelihoods of over 120 people and their families, $70 million of money entrusted to us by investors, and a big part of me. I had sacrificed so much to live the life of an entrepreneur. My marriage couldn't stand the strain of this lifestyle and ended in 2009, and while all of this was going on, my father was dying. Instead of spending time with him at his bedside, I was sitting in depositions with lawyers, and stressing over the lawsuit. He died July 13 2009, two months before we won the original judgement on the lawsuit. He would have been proud of me for following through with the fight.

While the company failed, I felt that I fought well, and that our death was not in vain. The Veoh ruling was cited in the Viacom vs. YouTube case, played a small part in YouTube's victory.